ePrints

The Choice Among Non-Callable and Callable Bonds

Lookup NU author(s): Professor Dimitrios Gounopoulos

Downloads

• Published version [.pdf]

Licence

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY-NC-ND).

Abstract

We examine the choice and the offer spreads between callable and non-callable bonds. We find significant differences by industry sector and therefore segment our results by financial and nonfinancial industries. For the financial sector, the popularity of callable and non-callable bonds is significantly related to the economic environment. Financial and high‐grade nonfinancial callable bonds are also more likely to be issued via a shelf prospectus. Although firms that issue callable bonds do not consistently display the characteristics associated with severe agency problems, the issue choice for below investment‐ grade nonfinancial and lower rated financial bonds, where we can expect agency problems to be more severe, is more consistent with agency theory than is the issue choice for higher rated bonds.

Publication metadata

Author(s): Booth L, Gounopoulos D, Skinner F

Publication type: Article

Publication status: Published

Journal: Journal of Financial Research

Year: 2014

Volume: 37

Issue: 4

Pages: 435-460

Online publication date: 25/12/2014

Acceptance date: 18/03/2014

Date deposited: 21/09/2016

ISSN (print): 0270-2592

ISSN (electronic): 1475-6803

Publisher: Wiley-Blackwell Publishing Ltd.

URL: http://dx.doi.org/10.1111/jfir.12042

DOI: 10.1111/jfir.12042

Altmetrics

Share